3. (12 pts) The following items are taken from the financial statements of Sutch Company for December 31, 2022: \( \begin{array}{lr}\text { Accounts Payable } & 15,000 \\ \text { Accounts Receivable } & 11,000 \\ \text { Accumulated Depreciation-Video Equipment } & 28,000 \\ \text { Advertising Expense } & 21,000 \\ \text { Cash } & 24,000 \\ \text { Common Stock } & 90,000 \\ \text { Depreciation Expense } & 12,000 \\ \text { Dividends } & 15,000 \\ \text { Insurance Expense } & 3,000 \\ \text { Note Payable (due December 31, 2025) } & 70,000 \\ \text { Prepaid Insurance } & 6,000 \\ \text { Rent Expense } & 17,000 \\ \text { Retained Earnings (beginning) } & 12,000 \\ \text { Salaries Expense } & 34,000 \\ \text { Salaries Payable } & 3,000 \\ \text { Service Revenue } & 145,000 \\ \text { Supplies } & 4,000 \\ \text { Supplies Expense } & 6,000 \\ \text { Video Equipment } & 210,000\end{array} \) Answer the following questions (Hint - prepare basic financial statements): (a) What is net income for the year ended December 31,2022 D (b) What is the balance in Retained Earnings at December 31,2022 \$ (c) What is total Current Assets at December 31,2022 \( \$ \) (d) What is total Current Liabilities at December 31, 2022 \( \$ \) (e) What is Total Assets at December 31, 2022 (f) What is total Stockholder's Equity at December 31, 2022 \( \$ \)
Solution
Step 1 ：\text{a) Calculate Net Income: Net Income } = \text{ Service Revenue } - \text{ Total Expenses}\newline\text{Total Expenses } = \text{ Advertising Expense } + \text{ Depreciation Expense } + \text{ Insurance Expense } + \text{ Rent Expense } + \text{ Salaries Expense } + \text{ Supplies Expense }\newline \text{Net Income } = 145,000 - (21,000 + 12,000 + 3,000 + 17,000 + 34,000 + 6,000)
Step 2 ：\text{b) Calculate Retained Earnings at December 31, 2022: Retained Earnings } = \text{ Retained Earnings (beginning) } + \text{ Net Income } - \text{ Dividends }
Step 3 ：\text{c) Calculate Total Current Assets: Total Current Assets }= \text{ Cash } + \text{ Accounts Receivable } + \text{ Prepaid Insurance } + \text{ Supplies }
Step 4 ：\text{d) Calculate Total Current Liabilities: Total Current Liabilities } = \text{ Accounts Payable } + \text{ Salaries Payable }
Step 5 ：\text{e) Calculate Total Assets: Total Assets }= \text{ Current Assets } + \text{ Video Equipment } - \text{ Accumulated Depreciation-Video Equipment }
Step 6 ：\text{f) Calculate Total Stockholder's Equity: Total Stockholder's Equity } = \text{ Common Stock } + \text{ Retained Earnings}
